The energy haves and have-nots

Will rooftop solar owners get off the grid — and leave other power users in the dark?

Andres Quiroz, an installer for Stellar Solar, carries a solar panel during installation at a home in Encinitas, Calif. in 2012. Stellar Solar installs residential and commercial solar panels in the San Diego area.

Sam Hodgson/Bloomberg via Getty Images

Carol Flint has the domestic carbon footprint of a gnat. On the roof of the Santa Monica, Calif., home she shares with her husband, Steve Jones, two dozen photovoltaic solar panels transform sunlight into electricity; by night, a plug-in electric hybrid Chevy Volt discharges stored-up watts for distribution to the grid by their utility, Southern California Edison. Flint almost never puts gas in the car, and in all but the darkest winter months, the couple generates more electricity than they use; the utility pays them for the excess. (Last year, they got a check for $129.). “I don’t like it when we have to buy off the grid,” Flint says. “I’m like, ‘Damn! We should have turned off more lights.’ ”

When I rode in the backseat of Flint’s planet-saving car recently, I thought about how excellent it would be if we could all live like she does. The latest, and ever more dire, report from the Intergovernmental Panel on Climate Change warns that droughts, floods and rising seas are now inevitable – the consequences of our dirty energy consumption. Our slim hope for a reprieve turns on how fast we can act to forestall the damage. Flint and Jones prove that the technology already exists to live a nearly carbon-free life, without shredding ecosystems for solar farms or constructing new towers and wires to transport wind energy.

It does, however, take money. Flint has produced and written for several hit television shows, including ER and The West Wing (she’s currently a producer on the USA Network show Royal Pains); Jones is the president of an international horticulture company, Green Fuse Botanicals. They can afford the $30,000 hybrid car; they paid up-front for their solar array. They are aware that they occupy an energy elite: Even at today’s historic low prices, rooftop solar still costs several thousands of dollars, and even a no-money-down lease from a company like Solar City requires a credit score of 680.

Nor are cash and credit ratings all that stand in the way of everyone deploying Flint’s solution. Logistical and geographical limitations abound. Some of us live in multi-unit buildings, or under tree canopies, or in places too dark or foggy to harness much sunlight. Some of us just don’t have enough roof.

The technology already exists to live a nearly carbon-free life, without shredding ecosystems for solar farms. It does, however, take money.

But at least we still have reliable electricity coming into our homes. We don’t actually need our own solar array to run our lights and computers; we still have the electrical grid, and the utilities that contribute to its maintenance. The Flint/Jones household still relies on that grid, too, to bring them electricity at night and on the rare rainy day, like a big, diffuse battery spread across the transmission wires.

One day, however, they may not need to. One day soon, many energy analysts predict, people with rooftop solar will also have batteries, fuel cells and microturbine generators to complement their solar when the sun goes down. In that case, some of the utility companies’ best customers could quit the grid and go it alone, leaving even fewer people to pay for the maintenance of transmission lines, substations and control rooms with smart-grid software. Rates will then rise for the rest, prompting yet more customers to defect, and driving rates up more: The dreaded utility death spiral.

CEO David Crane of the energy wholesaler NRG Inc. forecasts that utilities will soon go the way of the U.S. Postal Service, persisting only “to serve the elderly or the less fortunate,” he told BusinessWeek, while “the rest of the population moves on.” And that will leave us – the apartment dwellers, the socked-in, the working stiffs with 650 credit ratings – to pony up for a deteriorating electrical distribution system that feeds evermore reluctantly into our unlucky homes. At which point we might discover that our well-fed utility, along with the electrical grid it helped to maintain, was an awfully nice thing.

* * *

Universal access to electricity is a value that’s been embedded in our culture since the mid-1930s, when President Franklin D. Roosevelt ruled by executive order that farmers deserved lights, too. (Congress agreed, and later passed the Rural Electrification Act of 1936). Before then, hard-to-reach rural customers and those too poor to consume much beyond the wattage of an evening table lamp had no guarantee of reliable electrical service, mostly because it wasn’t in the provider’s free-market interest to serve them. A decade after the law began providing low-interest loans and grants for distribution networks, rural access to electricity jumped from 11 percent to 50 percent; by 1953, almost everyone in the country who wanted electricity had it.

In a Center for American Progress report last summer called “The Electrical Divide,” researchers Richard Caperton and Mari Hernandez warned that we may be on the verge of reversing that trend. Rooftop solar installations grew exponentially in the U.S. last year; storage – and defections – may not be far behind. “If these deeply transformative changes in the U.S. power sector are not managed properly,” the authors write, “21st century America could see an emerging electrical divide not unlike the digital divide of the late 20th century.” (For a taste of what the latter is like, read Emily Guerin’s recent story in this magazine: “Imagine the horror,” she writes, “of trying to navigate Healthcare.gov with dial-up.”)

Hernandez and Caperton floated several solutions, including expanding the federal Low-Income Home Energy Assistance Program (LIHEAP) to subsidize rooftop solar and other kinds of “distributed” generation – energy produced close to the people that use it. Federal and state governments could also offer financing for shared community solar projects. In 2010, California took $14.7 million in LIHEAP funds and called for energy providers to pitch efficient ways to spread solar out to low-income communities; the program resulted in close to 1,500 new solar installations on multi-family buildings and single-family homes in two years. “I was disappointed to see that it wasn’t renewed after 2012,” Hernandez says. “I haven’t seen anything else like it that addresses an energy divide.”

In fact, California has two other programs to subsidize solar. One, the Single Family Affordable Solar Housing program, has put solar on close to 4,000 homes since 2008; a similar fund for multi-family dwellings has outfitted just under 300 buildings. GRID Alternatives, the Oakland, Calif.-based nonprofit that manages the state’s single-family program, also funds solar for low-income homeowners in Colorado and New York, and has trained volunteers to install solar on 4,000 homes.

Some of the utility companies’ best customers could quit the grid ... Rates will then rise for the rest, prompting yet more customers to defect, and driving rates up more: The dreaded utility death spiral.

Noble as those efforts may be, those are not the kind of numbers that will transform the energy markets; the multifamily program has a waitlist so long it has closed to new applications. Meanwhile, there may exist another, less piecemeal solution that doesn’t require government funding so much as regulatory intervention – re-jiggering the utility business model so that rooftop solar becomes, instead of a drain on utilities’ revenue, a source of it. The way they’re currently formulated by most public utilities commissioners, for-profit utilities make money by leveraging investments in large, centralized power plants and the transmission lines that serve them. In some states, they also profit from how many kilowatt-hours they sell, but hardly any make money off rooftop solar.

Lena Hansen, an energy specialist with the nonprofit Rocky Mountain Institute, suggests that it might be possible to fix that problem at its root. Her organization has long advocated for distributed energy, and with it “a regulatory framework that rewards what we as a society want from our utilities: electricity that’s affordable, carbon-free and innovative.” Utilities could evolve rather than disintegrate, continuing to serve the “elderly and less fortunate” as ably as they manage supplies from rooftop solar owners. Everyone could stay integrated on the same “thriving, interconnected electricity grid,” Hansen says.

And the grid has its advantages. “It helps bring costs down; it creates a reliable system in general for all customers.” Rooftop solar has grid benefits, too – it’s clean, efficient and relatively predictable. “So the key question before us,” Hansen says, “is, ‘How do we revise the pricing structures to encourage more solar on the grid? How do we make sure that everyone is paying their fair share, but everyone is also being paid for what they’re providing?’ ” The goals is to keep incentives strong on both sides: For people like Flint and Jones to generate clean solar power for the utility; for the utility to survive, and maintain a robust system for the customers who depend on them.

Regulators with the Office of Gas and Electricity Markets in the United Kingdom have begun experimenting with price controls that value the carbon savings and resiliency of distributed energy, a system called RIIO (Revenue=Incentives+Innovation+Outputs). Minnesota recently developed a “Value of Solar Tariff” that allows utilities to perform a complex calculus to determine how much solar is worth to their system. Neither solution is airtight, but both, Hansen says, are good starts.

“There are a lot of people working on this problem,” she says. “These are tough questions.”

Carol Flint, for her part, appreciates that if too many people adopted her solution to the energy problem too quickly, trouble might ensue for all sorts of reasons. But taking the “long, long view,” she thinks what we’re doing now might be a preliminary exercise. “We’re getting our heads around the idea that we have alternatives,” she says. “The last 100 years have been about oil and coal. Now we’re asking, ‘Are there other ways?’ ”

It’s sort of like writing stories. “You run through a lot of ideas before you settle on one,” but you get nowhere if you don’t experiment. “Maybe we’re all in an experiment to change our minds about what gets produced in what way,” she says. “The process can sometimes lead you to a solution.”

Judith Lewis Mernit is a contributing editor to High Country News. She tweets @judlew.

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The Flints might use little carbon for utilities but commonly for people in their income range utilities are one of the smaller ways they use carbon. It's all those flights and new electric cars and large houses. Concrete and steel are not made of unicorn farts. Replacing a 400kwh per month usage with solar doesn't negate the fact that 400kw hours per month is the sign of energy gluttony. It's not turning out the lights it's turning off the AC and hot tub.

Ray Boggs

Apr 08, 2014 11:39 AM

Are solar leases and PPAs a ripoff ? You decide.

First of all, the homeowner has to forfeit the opportunity to collect the 30% federal tax credit worth about $10,000 on a 6 kW solar system at the leasing company's much higher pricing. The homeowner also gives up any cash rebate or other incentives......So much for free !A $0 down solar lease will typically cost the consumer up to 3 times more than the price to purchase a system. Don't believe it? Well it's simple math. Add up the 20 years worth of lease payment on a typical 4.7kW leased system and you'll find that the system will cost you about $28,080. Purchase the same 4.7kW system and apply the 30% federal tax credit and that same system will cost you about $9,642. So $28,080 to lease (rent) or $9,642 to own. So who's really paying for the repairs, insurance and monitoring on the leased system? Well, I'll give you a clue; it's not the leasing company. And good luck ever selling your home with a solar lease attached to it. What potential homebuyer will want to assume your lease payments on that used solar system, when they can buy a brand new solar system and keep all of the financial incentives for tens of thousands of dollars less than your remaining lease payments. And if you need $0 down financing, a much smarter way to go is with a $0 down FHA solar loan with tax deductible interest. (A solar lease or PPA does not offer tax deductible interest). Or how about a $0 down, low interest LightStream loan that requires no collateral whatsoever. Or how about one of those $0 down PACE financing programs with tax deductible interest, that are starting to sweep the nation, that allows the homeowner to make re-payments through their property tax bill. All three of these forms of financing require no money out of pocket and you get to keep the 30% federal tax credit and any applicable cash rebate instead of giving them away to the leasing company. And the best part is that you'll own your solar system for a much, much better return on investment.

Why not go green while saving a lot of green with a $0 down solar loan instead of an expensive lease.

Judith Lewis Mernit

Apr 08, 2014 02:32 PM

Thanks for your comment, Robb. I neglected to mention that Flint and Jones don't use air conditioning (nor are they the hot tub type). In Santa Monica, you don't really need AC — another luxury of their geographical location. I did qualify that small carbon footprint as "domestic," so I didn't include their air travel.

I'm not sure where you're getting the 400 kwh figure, but if you know something I don't and that is in fact what they use, I would argue that it's nevertheless a nontrivial number when you're talking about a shift to clean energy.

As for leasing, Ray: First, I should note that, as the story states, Flint and Jones did not lease their system, nor so they have a solar PPA. They paid up front for everything.The leasing model may well be a relic of an earlier regulatory environment when individuals couldn't claim a tax credit. But that's not really the point here. A low-interest loan still requires a good credit score.

Judith Lewis MernitHCN Contributing Editor

Richard Crow

Apr 08, 2014 03:03 PM

We have land in rural Westcliffe, Colorado where a lot of people are 100% solar. I have been told that you can expect to pay $30,000 to $40,000 for a complete solar setup. I believe batteries must be replaced every 10 years at a huge expense. A simple solar water heater is expensive but would likely pay for itself eventually.

John R DeCoville

Apr 08, 2014 03:39 PM

I am so glad that articles about problems in the Solar Industry and with solar Power consumers are problems because of Solar's immense success. Panels are on "Moore's Curve" and the news keeps just getting better. The options available now were unheard of 20 years ago and 15 years ago when I put expensive solar panels on our roof in Cochise County (SW Arizona near 4,700' elevation) there were still no leasing options available. Solar's first Great contribution is to make the Desert southwest inhabitable even as the climate changes. The second great contribution of Solar and Big Solar is to serve notice to large centralized electrical generating utilities that they are accountable for their actions and that they do not own the grid.

Yes, people are being left behind in this current situation but, as always, political action can balance the situation.

Jerry Nolan

Apr 08, 2014 08:54 PM

The production of solar panels emits so much green house gas, especially in the form of nitrogen-trifluoride (NF3), which is about 17,000 times more potent a greenhouse gas than carbon dioxide, that solar panels will likely need replacement before they they offset the gases emitted during production. Also, to be efficient, the production of panels should be powered from electricity from solar panels, but that is not done because it would raise the cost to uncompetitive levels. Solar is one of the least efficient way to produce electricity because of its poor energy/density ratio. Cost competitive energy/density ratios are found in coal, oil, natural gas, and the nucleus of an atom.

One last thought, what will be the cost to the environment to dispose of worn out solar panels?

Robb Cadwell

Apr 09, 2014 07:23 AM

What I was getting at was that there are many other factors that go into a carbon footprint, even if solar panels use no energy to manufacture.

The amount of carbon needed to keep two wealthy people is simply staggering. To begin with is the house, concrete manufacture is one of the larger sources of CO2, and then all the wood, plastic, drywall, copper, and glass that goes into a large house. How many square feet is enough to be comfy, four thousand, five? A house in Colorado too or Sun Valley? All kept heated with plants watered and drive plowed. Then there are all the people employed in making and delivering raw materials and building the house. Look at those guys in the photo, do they drive Volts? No of course not, they drive big pickups. Once a house is built there's the upkeep. Most wealthy people around here employ many many part time helpers (servants) from personal assistants to au pairs to landscapers, painters, remodelers, cleaning ladies and feng shui consultants. Cooks? or drive to a restaurant or order Thai take away. How many other cars? All Volts?

I pulled the 400 kwh number out of my hat. Looking at the City of Santa Monica web site the average is 950 kwh per month per person. Our family of four uses 400 for all of us and if we tried we could cut usage in half. Easily. How much power does it take exactly to watch one of those hit TV shows like West Wing or ER on a big screen TV? For that matter what does it take to manufacture and ship all the components of the home theater room the Flints being in the business no doubt have?

Well, Robb, leaving aside the imagined profligacy of my story's subjects, do you at least allow that generating more energy than one uses with solar, at least within the confines of one's house, and taking short trips on a car battery charged on solar, at least for one's daily commute, is preferable to the alternatives? And, to get back to the point of the story, what if all those many au pairs, landscapers, painters, remodelers, cleaning ladies and feng shui consultants, as well as (while we're at it) their personal yoga instructors, cooks and the musicians in the string quartets that accompany their dinners could also afford solar-powered Volts?

That's really what I was writing about after all — how to extend clean energy opportunities to people with lower incomes.

We can always establish hierarchies of environmental virtue, but that's another story entirely. I, personally, would tend to cut some slack for people who are trying to cut both their consumption and their carbon footprint the way Flint and Jones are; you may not. But I would not be so smug about your energy consumption; 100 kwh per person per month is hardly miserly. In the two darkest months of winter this year my husband and I consumed 417 kwh — right around 200 kwh/month for the both of us. And that's with computers and, yes, a very large TV.

Linda G Johnson

Apr 09, 2014 01:19 PM

You aren't talking here about the fee the electric companies have decided to put on their solar & other renewables users, a charge to support line costs, maintenance fees, and use of their electricity rarely (which costs them more money than using it with predictable regularity). This is a reasonable idea, but very discouraging to the renewable energy installers & manufacturers. It is also an ALEC sponsored move. I don't know a lot more than what I've already written, but beware. AZ has passed such a law. UT tried but was talked out of it by our wonderful people at Utah Clean Energy et al. Wherever you're sitting reading this, your state may be the next target. The article makes it clear that with enough individual home renewable use, the availability of power and grid may dwindle. That's not exactly a good thing in the short run. The potential problem needs to be dealt with ahead of time, while people can make thoughtful decisions; it can't be left to become a crisis.

Judith Lewis Mernit

Apr 12, 2014 11:46 AM

Hi Linda -- Great comment and yes, you're right about those fees. I didn't get into them in this story because I touched on the issue in the last (see https://www.hcn.org/issues/[…]key-to-an-energy-revolution), and the grid-maintenance fees the respective legislatures in California and Arizona set were much, much lower than the utilities had wanted. Both rulings were widely seen as victories for rooftop solar — especially because California lifted the limit on how much a utility has to buy back (before that was capped at a small amount of each utility's overall generation). But that's interesting about Utah — I wasn't aware that had happened — and it's definitely an issue to pay close attention to in other solar states. Hardly anyone I talk to thinks a surcharge is the best solution.

John R DeCoville says: "I am so glad that articles about problems in the Solar Industry and with solar Power consumers are problems because of Solar's immense success." Excellent point.

Judith Lewis MernitHCN Contributing Editor

Mark Lively

Apr 14, 2014 07:33 AM

I see that the electric industry will take some pricing design hints from the telephone industry, and institute residential demand charges.

I can remember when the telephone bill had dreaded long distance charges in the range of $0.30 per minute, which made calling my girl friend expensive. Now the calls are generally free but we have huge monthly access fees. The size of the monthly access fees increases depending on the generation of the network, 2G, 3G, 4G.

In the electric industry, these higher fees for the generation of the network are called demand charges. If you want to stream electricity at dial up speeds, you have a small demand and a small bill; DSL at somewhat faster speeds and a higher bill; cable faster still and still more expensive; FiOS and downloads zoom, but you are paying mightily.

For power, the speed at which you access the system is called demand, measured in KW, not KWH. (For the mathematically inclined, you can think of KW as KWH per Hour with the Hours cancelling). It can be measured, so it might be 4.5 KW, or 1.0 KW. It depends on how fast you use electricity and how much of the utility's wires you use.

The electric industry has long had demand charges for commercial and industrial customers. The metering was thought to be too expensive for residential. Maybe not now. I wrote about this two months ago on my blog http://www.livelyutility.com/blog/

Bruce Stenman

Apr 23, 2014 12:17 PM

This is a truly silly article. Residential solar systems have a cost benefit ratio that derives from not having to have an investment in an expensive cluster of lead acid batteries to store the energy produced. Instead it is fed real time into the grid where everyone benefits. In California currently solar provides 5% of the energy used but 30% of the peak energy demand is met by solar. Instead of more plants fired by fracked gas or nuclear, solar has allowed for growth in energy consumption without the risks and pollution of conventional energy sources.

This is also a situation where solar provides a viable alternative to coal and the attendant problems with global warming. One only has to look at the enlightened policies of the German government that is eliminating all nuclear energy production and has been encouraging solar energy production instead. The German government was also subsidizing the country's coal industry both in direct and indirect (health care) costs and it was $600 million a year or a tiny fraction of the subsidies for coal that exist in the USA at this time.

The west has also relied heavily on power from dams and as the climate change occurring reduces rainfall and snow pack this power is going to decrease. The power gap can be made up with natural gas from fracking or from imported LNG or from coal or from solar. Which would you prefer?

There is also a problem with having a few concentrated power generators that can have a transmission delay of less than a second that can cascade into a brownout or full blown power outage across multiple states. Small commercial solar generating sources can smooth out the fluctuations sufficiently to prevent this from happening. All that is needed is a change in the current regulations governing the inverters being used.

I cannot help but wonder if the Koch brothers or others in the conventional power industries are behind this article. It seems that the intent is to get people upset about the subsidies to the homeowners putting solar on their roof while diverting attention from the 100x greater subsidies for dirty power sources which are poisoning people and entire communities and devastating the planet.

Judith Lewis Mernit

Apr 24, 2014 06:12 PM

Bruce: I feel compelled to respond to the Koch-influence accusation. As you know from reading the article, I was prompted to dig into this issue because of a report that came from the Center for American Progress, a progressive nonprofit, as the name suggests. As you also read in the article, there are a lot of people working on what is a real, and challenging problem, viz. how to bring the clean energy revolution to renters and low-income homeowners, and how to keep the grid robust by encouraging widespread participation in its services. Finally, while the value of distributed solar to that grid is indeed rich, it's not something utilities get rewarded for in our current regulatory rate structure. That's one of the ways we're different from Germany. I would urge you to look into Minnesota's Value of Solar Initiative for one stab at a solution. I'd also urge you to refrain from using words like "silly" to describe a puzzle many smart people are spending a lot of effort trying to solve.